Tariffs didn’t bite the market in May, but June could be different
The strong performance for stocks in May could be a sign that Wall Street has decided to shrug off President Donald Trump’s tariff plans, but there are some reasons to think the impact on trade will be harder to avoid in the months ahead. For one, global trade does not appear to have found a new equilibrium just yet. Container ship departures from China to the U.S. are trending lower again, and as of late May were down almost half from the same time a year ago, according to a chart shared by Apollo Global Management chief economist Torsten Slok. “The court ruling and reversal over the past few days is not making it easier for businesses to decide if they should import now or wait,” Slok said in a note Friday. Add in Trump’s accusation on Friday that China has ” violated ” the preliminary trade agreement reached earlier this month, and it’s hard to blame companies who might be hesitant to place that next import order. Inflation is another factor that is still up in the air. Friday’s personal consumption index data came in a tick lower than expected , but that reading was for April. Cayla Seder, macro multi-asset strategist at State Street, told CNBC that her firm’s data shows a recent uptick in prices for household goods and electronics. That could lead to continued pressure on stocks like tech hardware and retail, many of which are already trailing the broader market in 2025. XRT YTD mountain This retail ETF is underperforming the S & P 500 in 2025. “You see a preference for producers and strong selling of retailers … You have producers who are passing on the price increases to retailers, and now it’s up to retailers to pass those price increases on to the consumer,” Seder said. Of course, just because the impact of tariffs may not be fully seen yet does not mean the stock market must re-test its lows from April. Ritholtz Wealth Management CEO Josh Brown said on Friday’s ” Halftime Report ” on CNBC that the issues of some companies, such as struggling retailers, “pale in comparison” to the stronger parts of the market, like Big Tech. But with most trade routes operating under an ever changing and legally uncertain cloud, the summer just might present more challenges for the current bull market.
